Strong Irish market helps to lift Grafton's first-half profit to £77m
A RESURGENT Irish economy has boosted Grafton Group's bottom line, with its merchanting business here contributing more than £20m (€21.7m) to the company's £61.8m (€67.1m) organic revenue growth during the first half of the year.
Its Woodies DIY chain contributed £4.6m (€5m), as the company continued to reap the benefits of store revamps and more confident consumers.
"The Irish economy and the housing market is recovering in such a way that it should be sustainable for the medium to long-term," chief executive Gavin Slark, pictured, told the Irish Independent.
"If you look at the way the Irish market has recovered, it's good for the builders' merchant business."
Grafton's two Irish divisions contributed £5.1m of the total £12.2m group increase in adjusted operating profit growth in the first six months of 2017.
On a group level, revenue at Grafton during the first six months of the year jumped 6.2pc on a constant currency basis to £1.33bn (€1.44bn). Grafton's adjusted operating profit, excluding property gains, rose 18.8pc to £77m (€83.6m). The results were better than expected by analysts, but shares in the group remained flat during the day.
Grafton generated £919m of its revenue in the first half from its UK merchanting business, where it owns chains such as Selco, Buildbase and Plumbase.
In Ireland, its merchanting arm operates under the Chadwicks and Heiton Buckley brands, and accounted for £193m of revenue in the first half of the year. That was 10.6pc higher year-on-year on a constant currency basis.
Profits at the Irish merchanting business rose 30.4pc on a constant currency basis, to £15.4m in the first half.
The chief executive of Grafton's Selco business, which includes 56 branches, has left his post and has been temporarily succeeded by Declan Ronayne, the chief executive of Woodies. Mr Slark said Mr Ronayne will return to his Woodies role at the end of this year.
Grafton's business in the UK also performed strongly in the first half. Merchanting revenue there was 4pc higher, while the adjusted operating profit before property gains was 6.8pc higher at £50.1m.
Mr Slark said he remains confident about the UK's economic prospects, despite Brexit.
"I've got reasonable confidence in the UK in the medium term," he said.
"It's got 60 million people. There's been an under-supply in the UK for some considerable time, so the underlying fundamentals of the new-build market in the UK should remain quite resilient."